Correlation Between Com7 PCL and Chin Huay

Can any of the company-specific risk be diversified away by investing in both Com7 PCL and Chin Huay at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Com7 PCL and Chin Huay into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Com7 PCL and Chin Huay PCL, you can compare the effects of market volatilities on Com7 PCL and Chin Huay and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Com7 PCL with a short position of Chin Huay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Com7 PCL and Chin Huay.

Diversification Opportunities for Com7 PCL and Chin Huay

-0.66

Correlation Coefficient

Com7 PCL  Chin Huay

Excellent diversification

The 3 months correlation between Com7 and Chin is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Com7 PCL and Chin Huay PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chin Huay PCL and Com7 PCL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Com7 PCL are associated (or correlated) with Chin Huay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chin Huay PCL has no effect on the direction of Com7 PCL i.e., Com7 PCL and Chin Huay go up and down completely randomly.

Pair Corralation between Com7 PCL and Chin Huay

Assuming the 90 days trading horizon Com7 PCL is expected to generate 1.68 times more return on investment than Chin Huay. However, Com7 PCL is 1.68 times more volatile than Chin Huay PCL. It trades about 0.07 of its potential returns per unit of risk. Chin Huay PCL is currently generating about -0.25 per unit of risk. If you would invest  2,430  in Com7 PCL on September 2, 2024 and sell it today you would earn a total of  220.00  from holding Com7 PCL or generate 9.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Com7 PCL  vs.  Chin Huay PCL

Com7 PCL

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Com7 PCL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Com7 PCL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Chin Huay PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chin Huay PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Com7 PCL and Chin Huay

The main advantage of trading using opposite Com7 PCL and Chin Huay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Com7 PCL position performs unexpectedly, Chin Huay can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Chin Huay will offset losses from the drop in Chin Huay's long position.

The idea behind Com7 PCL and Chin Huay PCL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.